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Will the Increase in the Consumption Tax Derail Abenomics?

SAO PAULO | By Marcus Nunes | The WSJ has a piece which closely reflects the consensus view on the matter: “Japan´s Sales-Tax Boost will Test Abenomics”: The tax increase is designed to pay for Japan’s ballooning social-welfare costs and to pare its huge public debt, which, at more than twice the size of the economy, is the largest among rich nations.

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The next stage of the Japan trade

LONDON | By Barclays analysts | There appears to be increasing market doubt over the sustainability of the “Japan trade”. Year- to-date, the yen has rallied more than 3%, while the Nikkei is down 11%, placing it among the worst performing indices of the year. This is due in part to concerns over the impact of the forthcoming fiscal drag as the VAT hike takes effect on April 1st.

Abenomics one year on

SAO PAOLO | By Marcus Nunes | Shinzo Abe was elected in December 2012 on a promise to revive growth and put an end to deflation. How have his promises ‘performed’ one year after taking power? The ‘performance’ of the so-called Abenomics will be illustrated by a set of charts.

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Abe Goes Ahead and Orders Tax Increase

SAO PAULO | Bu Marcus Nunes | What Japan needs to do is keep doing what Abenomics said it would. Since their explicit target is 2% inflation, they will have to ‘factor out’ the tax increase. In the past they didn’t and we know what happened. If the BoJ’s Kuroda does his job well Japan has a fighting chance to progress, and the median calculation of economists that expect a short-term contraction following the tax will not pan out.

Abenomics work

BARCELONA | By CaixaBank research team | Our scenario expects this expansion to continue in 2014 since the effects of the Bank of Japan’s quantitative easing should continue until well into the coming year.